But suddenly, its business is in the trash can. Towering stacks of paper are building up on its one-acre lot, so it stopped accepting recycled paper from the public and for the first time it is charging a fee to pick up old cardboard boxes from groceries and the like.

Recycled paper is the biggest export by volume from the ports of Los Angeles and Long Beach. It is bought mainly by Chinese paper mills that recycle it into packaging that’s used to box up goods which China exports to the United States and elsewhere.

Until recently, China’s bullish economy coupled with the weakened dollar pushed paper prices to just shy of $200 a ton. But a sudden drop in demand from Chinese mills sent the price of waste paper and cardboard plummeting. A month ago, exporters could get $142 a ton for waste cardboard. Last week, they said they’re lucky to receive $40 a ton – if anything at all.

“This just nosedived to never-before-seen numbers,” said Gina Vander Meer, sales manager at South Bay, which recently let go of seven of its yard staff. “It’s crazy.”

For now, the waste paper companies said they’re still picking up recycled paper from office buildings, groceries, retailers and other customers. But with no place to ship it, they have paper stacking up to the margins.

The price drop has had a trickle-down effect on curbside recyclers, who collect discarded paper from neighborhoods and sell it to businesses like Allan Co., one of the top paper exporters in the county. Stephen Young, the company’s president, said Allan usually gets 40 to 50 tons of paper a day from collectors and the general public; now it’s receiving about 10 to 20 tons. The rest, Young said, is ending up in landfills.

Los Angeles County has been a nationwide hub of paper exporters. In 2007, local companies shipped 164,000 containers – each roughly the size of a small recreational vehicle – full of paper out of the Port of Los Angeles, said Marcel Van Djik, the port’s marketing manager. The second-highest commodity export was cotton, at 75,000 containers.

Ships that deposited imports from Asian countries at the ports of Los Angeles and Long Beach would return with containers crammed full of recycled paper exported by companies such as City of Industry based-America Chung Nam Inc., the largest exporter in the United States, and Baldwin Park’s Allan Co.

But cooling demand in China prompted by the worldwide economic slowdown slammed the brakes on the paper commodity market. Industry executives said the speed of the current downturn in prices makes it unlike dips they’ve seen in the past.

“This isn’t cyclical. This is a damn depression,” said Young of Allan Co., which exports about 1.5 million tons of paper a year. “When prices fall $100 a ton, it’s really, really rough.”

Paper tiger